Multi-property owning landlords grow as negative gearing wanes

The proportion of Australians losing money on rental homes is falling but new figures reveal a growing number of people with at least three properties being propped up with assistance from taxpayers.

As Labor confirmed an overhaul of negative gearing rules will commence from January 1 if it wins next month's election, tax data shows 1.3 million people made a combined loss of more than $12 billion on their rental houses and units.

The Australian Taxation Office data covering the 2016-17 financial year showed 11,349 people held at least six properties on which they are negatively geared.

The number of people negatively gearing three or more properties has grown despite the falling proportion of loss-making landlords.

Although only up marginally on the 2015-16 period, the number with six or more negatively geared properties has grown by 10 per cent since the Coalition came to power.

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The biggest increase has been among people holding five properties which now stands at 11,126, an increase of 16.5 per cent since the 2013-14 financial year.

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Single property owners remain the most numerous at 930,00, having increased by less than 3 per cent since the election of the Abbott government.

The overall number of people negatively gearing a property has fallen over the past four years but the proportion with more than three properties now amounts to almost one in 10.

The single biggest deduction for both positively and negatively geared properties remains interest. In 2016-17, negatively geared landlords claimed back $18 billion in interest costs compared to $3 billion among the 855,000 people who broke even or made a profit on their properties.

Labor's changes to negative gearing are already being targeted by the government which has warned they will drive down house values and increase rents.

Trade Minister Simon Birmingham said the start date of Labor's policy would be a dark day for home owners.

"Labor's policy announcement today is January 1, should a Labor government be elected, can be marked in the diary as the time in which Australian home owners will see the values of their properties diminish and renters will see the price of rent increase," he said.

The Property Council said on Friday it was still "strongly opposed" to the proposal and its possible impact on the housing market and broader economy, particularly around new housing construction.

Labor's policy will grandfather negative gearing arrangements for existing landlords, but after January 1 only those building new rental properties will be able to write-off losses against their overall tax.

Shadow treasurer Chris Bowen is standing by the policy, saying the tax office data confirmed the rise in people who were getting tax assistance for their fifth or sixth property.

"Labor wants to create the conditions that promote home ownership, not a system which promotes a nation of property oligarchs and renters," he said.

"The stronger growth for investors accumulating multiple investment properties is just another indication of the ‘excesses’ in negative gearing, something the current Prime Minister is well aware of."

Mr Bowen also confirmed Labor's halving of the concession on capital gains tax will also start from January 1.

The ATO figures show that tens of thousands of people will potentially be affected by Labor's plan to curb tax refunds from retired shareholders who no pay any tax via changes to franking credits.

Of 800,000 people who earned less than $6000 in the financial year, 269,000 shared in almost $100 million of franking credits or $371 per person on average. Combined, this group of people paid $19.8 million in net tax.

At the other end of the scale, 30 Australians who earned more than $1 million in income but paid no tax shared in $6.1 million of franking credits or more than $203,000 each.